PROFILE / Richard Blum / The man behind URS, next to Sen. Feinstein

Tom Abate, Chronicle Staff Writer

Published
4:00 am PDT, Sunday, May 11, 2003

WBAHF01-C-17APR01-SF-CS Richard Blum, husband of Senator Dianne Feinstein, founded The American Himalayan Foundation, that has for 20 years provided education, health care, reforestation and cultural preservation for the people of Tibet, Nepal and parts of India. He stands outside his Montgomery Street office surrounded by Nepalese prayer stones and flags. SAN FRANCISCO CHRONICLE PHOTO BY CHRIS STEWART ALSO RAN 3/13/02 less

WBAHF01-C-17APR01-SF-CS Richard Blum, husband of Senator Dianne Feinstein, founded The American Himalayan Foundation, that has for 20 years provided education, health care, reforestation and cultural ... more

Photo: CHRIS STEWART

Photo: CHRIS STEWART

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WBAHF01-C-17APR01-SF-CS Richard Blum, husband of Senator Dianne Feinstein, founded The American Himalayan Foundation, that has for 20 years provided education, health care, reforestation and cultural preservation for the people of Tibet, Nepal and parts of India. He stands outside his Montgomery Street office surrounded by Nepalese prayer stones and flags. SAN FRANCISCO CHRONICLE PHOTO BY CHRIS STEWART ALSO RAN 3/13/02 less

WBAHF01-C-17APR01-SF-CS Richard Blum, husband of Senator Dianne Feinstein, founded The American Himalayan Foundation, that has for 20 years provided education, health care, reforestation and cultural ... more

Photo: CHRIS STEWART

PROFILE / Richard Blum / The man behind URS, next to Sen. Feinstein

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San Francisco financier Richard Blum, who first invested in URS in 1975, may be the man who has everything, except perhaps, his privacy.

Thrust into the public eye by virtue of his 1980 marriage to then-mayor and now Sen. Dianne Feinstein, Blum over time has become leery of media attention, which often comes coupled with questions about potential conflicts of interest.

As a result, the collective memory has all but forgotten the colorful history and eclectic interests of the 67-year-old Blum.

Born the son of a clothing salesman who died of cancer when he was 10, Blum graduated from San Francisco's public schools to UC Berkeley, where he earned his MBA -- after taking a one-year detour to study philosophy at the University of Vienna.

At 23, he went to work at the San Francisco brokerage firm Sutro & Co., where he became a partner before age 30. While still at Sutro, Blum proved that he had an eye for fixer-upper properties when he led a partnership that acquired the struggling Ringling Bros. and Barnum & Bailey Circus for $8 million -- then sold it to Mattel Inc. four years later for $40 million.

With that deal to burnish his reputation, Blum struck out on his own in 1975, forming what is now called Blum Capital Partners. The San Francisco firm raises money from pension funds, foundations, insurance companies and wealthy individuals, and buys stakes in undervalued companies with the expectation of selling them at a profit. With about $4.5 billion under management, Blum Capital holds positions in some 20 companies, including credit reporting firm Fair Isaac and real estate giant CB Richard Ellis.

According to spokesman Owen Blicksilver, Blum's 1975 investment in URS was one of his first forays as the head of his own firm. Blicksilver said Blum first invested in URS to help it fend off a hostile takeover. He increased his stake in the firm during the late 1980s, when he helped bail it out at a time when the company was rocked by an accounting scandal.

Blum's net worth isn't known. His spokesman insists "he's not a billionaire. " But, thanks to his penchant for money making, the San Francisco financier has been free to cultivate nonbusiness interests, notably politics, mountain climbing and Tibetan Buddhism.

In the 1970s, Blum supported then-Mayor George Moscone. After Moscone's assassination, he befriended new mayor and rising political star Dianne Feinstein. Local media followed every turn in their developing relationship. News photographers memorialized the day in 1980 when Blum and Feinstein plunked down $10 for a marriage license. Reporters doted on Blum's interest in Buddhism.

In 1981, Blum organized the first modern expedition to scale the east face of Mount Everest. He filed dispatches on the expedition to the San Francisco Examiner. In these articles, he explained how a goodwill visit to China by Feinstein in 1979 won him the ear of the Chinese authorities, who ultimately granted him access to the long-forbidden slope.

"We had come to build goodwill, promote trade and to make new friends," Blum wrote in one story, adding, "but I asked for and received permission to have another kind of meeting -- one with the Chinese Mountaineering Association."

Over the years, however, as Blum and Feinstein have grown in their respective spheres of business and politics, critics have periodically wondered whether one or the other member of this power couple had unduly used their money or influence to benefit the other.

Such questions have surfaced again in the wake of the $600 million military contract won by EG&G Technical Services, a new division that URS purchased in 2002 from the well-connected Washington, D.C., investment firm the Carlyle Group.

Carlyle is a $14 billion buyout firm whose associates and advisers include former President George Bush, former British Prime Minister John Major and former Securities and Exchange Commissioner Arthur Levitt. As part of EG&G's sale price, Carlyle acquired a 21.74 percent stake in URS -- second only to the 23.7 percent of shares controlled by Blum Capital.

Anti-war leader Bill Hackwell, a spokesman for the Answer Coalition, said he hates to see politically connected firms like URS win big defense contracts at a time when budgets for schools, health care, housing and other domestic programs are shrinking.

"We regular people don't have any say in all of this, whether the contracts are bid out or not," Hackwell said, adding that the "the whole military industrial complex is becoming enmeshed with the government."

Bruce Cain, director of the Institute of Governmental Studies at UC Berkeley, said such amorphous conflict-of-interest allegations are increasingly becoming part of the political discourse. He drew a distinction between vague concerns about people who seem to have too many powerful friends and situations in which officials make a decision beneficial to someone they know.

"We use the law to protect against the second category and elections to judge the wisdom of the first," he said.

Blicksilver rejected any suggestion of a direct conflict in the case of URS' defense contract. He said that although Blum sits on the URS board, he has no day-to-day role in running the firm, arranging its mergers or soliciting contracts. "Mr. Blum and Sen. Feinstein have never had any discussions about outsourcing, government contracts or URS," Blicksilver said.

Feinstein spokesman Howard Gantman ridiculed a reporter's question about whether it might be a conflict that the senator voted for a bill that urged federal departments to outsource civil service jobs to contract employees. He noted that the bill that set the outsourcing trend in motion had passed the Senate by unanimous consent and been signed by former President Bill Clinton and was now being implemented by the Bush administration.

"To imply that both administrations and 100 senators are doing this to help any individual companies is patently absurd," he said.